A Mart For All Seasons.

THE DENVER MERCHANDISE MART HAS WEATHERED CHANGE AND CONTROVERSY, AND BUCKED A NATIONWIDE TREND.

By necessity, Darrell Hare is a practitioner of the art of management-by-wandering-around.

As president and general manager of the Denver Merchandise Mart, Hare has to cover a lot of ground. His daily schedule includes countless crisscrossings of the 841,000-square-foot complex, putting out fires, glad-handing tenants and exhibitors, and generally keeping an eye on things.

At the Gift, Jewelry and Resort Show, for instance, Hare was up early and making the rounds. In the Forum area, set up that morning for a buffet-style breakfast, he was reassured to see buyers and exhibitors wandering in for coffee, getting ready for a big day. All was well. But then he spotted something that he'd never seen at the Mart before: Over in one corner a line was forming, already beginning to snake around the room. As common as lines are in other parts of the commercial universe, it was an odd sight here in the vastness of the Mart, like plankton queuing up at the mouth of a whale.

Hare wandered over with the intention of disabusing his guests of the notion that their line into the exhibition hall, which was scheduled to open soon, was really necessary. The line turned out to be composed of retailers hoping to get a first crack at the booth of Ty Inc., manufacturers of Beanie Babies.

It was a reminder to Hare that the Denver Merchandise Mart lives or dies on the human need for personal, one-on-one contact. And that, while many of the mart's coequals in other U.S. cities have been shrinking, the Denver mart, more than merely surviving, is thriving, with '99 revenue of $14 million.

"It's a people thing," said Hare, who pointed out that Beanie Babies, like all the other merchandise featured in the Mart, can be ordered by phone, fax or Internet. Electronic commerce may be a great thing, he allowed, but "people still want to meet a real person, touch the merchandise, squeeze the stuffed bear for themselves."

Fashion-driven industries with rapidly changing product lines, such as the ephemeral (and therefore collectible) Beanie Babies, are one of the chief reasons the world still needs merchandise marts.

The Denver Merchandise Mart since 1973 has been regional landlord to manufacturers' showrooms, and host to trade shows and exhibitions. Occupying two city blocks northeast of the juncture of I-25 and 58th Avenue, the complex is as big as it is plain, a labyrinth of huge, brightly lit caverns flanked by 20-foot-tall sections of pre-stress tilt-up. G.C. Merchandise Mart LLC, a wholly owned subsidiary of Dallas-based American Realty Trust (NYSE:ARB), owns the Denver Merchandise Mart, based in Adams County. The Mart has seen steady expansion over the years, with renovation of its main ball in 1980 and again in 1985, and a 75,000-square-foot expansion of the Plaza Event Center in 1998.

On any given weekday, with no trade shows scheduled, the atmosphere at the Denver Merchandise Mart is businesslike and quiet. Shoppers at the Mart's permanent showrooms, who must prove their status as wholesale buyers at the door, seem to know where they're headed and what they're looking for when they get there. The area features some 400 showrooms designed to emulate the native habitat of their retail customers. The aisles are crowded with eye-catching merchandise and the showrooms are extravagantly lit with an abundance of flexible track lighting. It's uncrowded and quiet, with many of the hundreds of showrooms closed, their sales reps out making calls.

This is the traditional side of the Merchandise Mart's business, a concept that hasn't changed since department store magnate Marshall Field opened the Chicago Merchandise Mart in 1930, creating the model for every merchandise mart that followed. But the last decade has seen big changes in the nature of the business.

Nationally, "Most of the marts have downsized and changed their primary focus," Hare said. "Many were heavily dependent on ladies' and children's apparel," where distribution methods changed dramatically over the past decade. Once consumers found designer labels only in exclusive stores. A few years ago, factory outlets started to emerge, along with such discount stores as Wal-Mart. Then came the Internet, catalog sales and other distribution methods that inhibited or eliminated boutiques and other specialty stores.

Even big department stores -- May D&F and Denver Dry, for example -- have changed. "Those were major buyers here," Hare said. Mergers and acquisitions mean bigger companies that "do centralized buying." As a result, major marts in such cities as Los Angeles, Miami and Dallas have downsized, as has Chicago's, which recently donated one of its buildings to a nearby hospital.

Hare said Denver took a harder hit in some ways. Wal-Mart and other discount stores hit small rural especially retailers hard, he said. The mart's apparel reps dropped from 50% of the total to 15%.

"We knew things weren't going back," Hare said. "We have been fortunate enough, by promoting more niche-type tenants," such as Gift, Jewelry and Resort; Home Furnishings and Accessories; and Western Apparel and Equipment. Business is very strong, with 1999 "the biggest year ever," he said. The gift show drew 40% more attendees than the previous year, which should carry over into 2000, he said. Today, apparel, once more than 74% of its business, accounts for less than 18% of revenue.

The biggest change of all has been the Denver Merchandise Mart's move from simply providing space to actually owning and producing trade shows, Hare said.

"Years ago, merchandise marts were just landlords," said Hare. "But this is changing. We've discovered we have to take control of our own destiny." But it's expensive: Gift shows alone cost the Mart about $500,000 each.

Among the shows that the Mart now produces itself is the Gift, Jewelry and Resort Show, held in February and August, and the World Wide Antique Show, held four times a year.

The Merchandise Mart is still the landlord of choice for many trade show promoters, including the Denver International Western/English Apparel & Equipment Market, in January and September, and the Western Winter Sports Representatives Association Ski Show, held in April and September. The DMM also hosts wholesale auto shows, apparel and accessory shows, and a whole host of trade association meetings and conventions, from banking to the auto industry.

It is also home to a variety of public events, including gem shows, lifestyle expos, martial arts tournaments, auto shows, gun shows (see sidebar), billiard tournaments, bridal festivals and book fairs. And as the Merchandise Mart becomes more involved in planning, Hare has also seen the demand for education and entertainment skyrocket.

"One of our biggest changes has been the demand for educational programming," said Hare. Where attendees were once content to browse acre after acre of stuff, the model for the trade show of the '90s, and for the foreseeable future, uses seminars to drive sales. "We've brought in more and more education, because that's what people want."

CONTROVERSIAL GUN SHOWS, NOT

Gun show attendance at the Denver Merchandise Mart was up last year and organized anti-gun protests, nonexistent.

After the Columbine shootings, some show organizers had anticipated protests, but none materialized.

"If anything, there was more attendance," said Darrell Hare, Mart president and GM. The Tanner Gun Show, where the guns used in the shootings were purchased, is a 20-year tenant, he said. "From our standpoint, we have car shows here, too. I don't want to sound callous. We provide the facility. It's not our business to (judge)." Tanner show representatives didn't return ColoradoBiz phone calls.

The Colorado Gun Collectors shows attendance last year rose 15%, said Bud Greenwald, show chair. That despite the facts that it was the first gun show at the Mart after the shootings, that some exhibitors dropped out, and that the National Rifle Association had scaled back its Denver meeting.

Anti-gun groups instead are focused on the law. "We are very interested in working in the state legislature," said Ted Pascoe, executive director of the Colorado Coalition Against Gun Violence. "We have heard gun sales were up in December. That may be a function of Y2K, people preparing for the worst.

"We're not trying to do away with gun shows. The NRA might try to argue that." Instead, he said the group wants to keep guns from criminals and kids.

"We can do that without threatening the gun shows," he said.

                AMAZING TRUE DENVER MERCHANDISE MART FACTS
                 Out-of-Town and Trade Show Exhibitor and
                          Attendee Visitor Nights
1995 88,130
1997 97,538
1999 175,821
                           Out-of-Town and Trade
                            Show Exhibitor and
                             Attendee Spending
1995 $20.26 million
1997 $23.78 million
1999 $43.74 million
                           Mart and Mart Tenant
                                Direct Jobs
1995   758
1997   813
1999 1,113
                              Total earnings,
                            direct and indirect
1995 $48.63 million
1997 $58.40 million
1999 $69.41 million
Source: David Bamberger & Assoc., Kovacs Real
Estate Valuation Services Inc., "Economic Impact
of the Denver Merchandise Mart, 1995-1999."